Unilever is shedding Dollar Shave Club and putting a pause on acquisitions as it revealed earnings declines across all of its major trading categories in Q3 2023.
The personal care goliath saw turnover decline by 3.8% to €15.2bn, down from the €15.8bn it reported just one year earlier.
Turnover for its Beauty and Wellbeing division also decreased by 4.9% to €3.1bn, while Personal Care sank by 2.2% to €3.6bn.
Despite this, underlying sales growth was up by 5.2% during the three month period, with only a 0.6% volume decline.
Unilever's recently appointed CEO, Hein Schumacher, said he is “not happy” with the company’s current overall competitiveness.
“Despite these strengths, our performance in recent years has not matched our potential,” he said.
“The quality of our growth, productivity and returns have all under-delivered.”
Schumacher stressed there will be no major acquisitions for the foreseeable future as he unveiled a recovery plan for the remainder of the financial year.
This plan also includes the sale of Dollar Shave Club to Nexus Capital Management, a US-based private equity firm.
Fabian Garcia, President of Unilever Personal Care, explained that this marks another step in the business journey to transition its portfolio towards “core strategic growth areas”.
Schumacher noted that profitability in Europe had also declined quite significantly.
European sales volumes were down 10.7% during the quarter, with Unilever noticing an increase in downtrading and a move to smaller basket sizes.
“Our price increases were not able to recover cost inflation, as cost conscious consumers moved across to value labels,” Schumacher added.
Unilever’s sale of personal care brand Suave was another contributor to the turnover declines.
The sale formed part of Unilever’s decision to streamline its portfolio of brands and inventory, which began in 2022.
Over 50,000 skus have been removed from its Personal Care division, and it has delisted over 60 local brands.
Expanding on this, Schumacher today outlined his recovery plan for the brand owner, under which “remedying” these shortfalls will be a “top priority”.
Strategies will also include a focus on stepped-up volume growth, a rebuilding of its volume margins and generating strong cash values.
The core of this plan revolves arounding bolstering its top 30 ‘power brands’, which include Dove, Magnum and Helmans and represents over 70% of its turnover.
“Prioritising these brands will give us a real opportunity to improve Unilever's growth profile,” added Schumacher.
Unilever will also continue to reshape its portfolio of brands, after seeing a lack of return on recent acquisitions.
“Horlicks was one of our biggest and most important acquisitions, [but] the business is not yet growing at the level we expect,” said Schumacker.
Other goals with the recovery plan include scaling multi-year innovation and increasing brand investment and returns, with an increased investment focus on areas that drive impact.
Despite the lagging turnover, Unilver said its outlook for the remainder of the year remains unchanged, with underlying sales growth expected to be above 5%.
Unilever has appointed Fernando Fernandez as its new CFO, who replaces Graeme Pitkethly on 1 January 2024.
Pitkethly announced his decision to retire from the company earlier this year.
Priya Nair, currently Chief Marketing Officer for Beauty & Wellbeing, has been appointed President Beauty & Wellbeing, replacing Fernando.
“Fernando has had a very impressive track record throughout his Unilever career, in a variety of financial, marketing and general management roles,” said Schumacher.
“His deep financial and business experience, strategic acumen and leadership qualities will be critical in helping to drive the step-up in Unilever’s performance that we are all determined to deliver.”
